The Wisconsin Housing and Economic Development Authority is now seeking public input on proposed changes to its tax credit distribution plan, which would require buildings to be more environmentally friendly, direct more credits to projects in rural communities and set greater restrictions on rent increases.
The changes would affect the way WHEDA scores projects for both the federal 9% and state 4% tax credit awards in 2021 and 2022.
WHEDA’s proposed changes for the federal awards include:
- Higher scoring requirements and preferences in “green” home standards;
- Higher scoring for projects with supportive services, including for veterans;
- More flexibility to provide any combination of units at levels that would be affordable for renters earning 60% or less of area income;
- Establishing a separate scoring scale for rural projects, which typically are of a smaller scale than urban projects;
- Putting a stronger preference on rural areas that have not received tax-credit awards in the last five years;
- A new, small scoring preference for applications for applications that include a minority developer or co-developer with at least 49% in all aspects of the project.
Proposed changes to the state program include:
- A new rural set-aside directing 25% of tax credit awards annually toward projects in rural communities, similar to what is already on the federal program;
- Adding a requirement that, in order for a multi-family project to be considered rural, that it be in a community with a population of under 10,000 and located at least 25 miles from a large population center;
- Developers competing for credits under the supportive housing set-aside must provide supportive services in at least 25% of the units for those who are chronically homeless or prone to homelessness, and the developer must commit for rental subsidies covering at least 25% of the project’s units.
More details of the proposed changes can be found on the WHEDA website.
“As part of our continuing efforts to expand access to affordable housing and economic opportunity, WHEDA has been working with stakeholders to develop proposed changes that make our allocation of federal and state tax credits as effective as possible,” Matt Childress, commercial lending project manager for WHEDA, said.
WHEDA is accepting public comments via an online survey or by email to firstname.lastname@example.org. Comments are due by Monday.
Childress said WHEDA has already gathered comments through public information sessions held across the state in the fall. It will also meet on Thursday with an advisory committee consisting of municipal leaders, lawyers, property managers and developers to “engage more pointed feedback on our proposed changes,” he said.
Childress said the tax-credit program standards follow national industry best practices, though many of the changes are either administrative or are in response to specific needs in the state.
The federal program is larger than the state, which was first introduced in 2018. For instance, WHEDA will this year award about $16 million worth of federal tax credits and $8 million worth of state credits. Recipients of the current year’s tax credits will be announced in the coming weeks, according to a news release.
WHEDA has administrated the federal affordable housing tax credits in Wisconsin since 1986; the state program was created two years ago. The programs offer a dollar-for-dollar reduction of income taxes owed by owners/investors in projects for tenants whose incomes are at or below 60% of the county’s median income.
Developers who are awarded the credits then sell them to private investors to obtain funding. Once the project is available to tenants, investors can claim the tax credit as a reduction of federal income taxes over a 10-year period. The units are to remain affordable to low- and moderate-income residents for at least 30 years.
The 2021 tax-credit award cycle opens in December, when WHEDA will begin taking applications from developers.
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